Mercury top execs resign in accounting scandal

By
Stacy Cowley, IDG News Service
| Nov 03, 2005

| IDG News Service

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Mercury 's three top executives have resigned over an accounting scandal.

CEO Amnon Landan, CFO Douglas Smith, and general counsel Susan Skaer were strongly criticised in an internal report over the mishandling of stock options. A special committee of Mercury board members began investigating the company's accounting in June, following a US Securities and Exchange Commission inquiry.

It found that over the past decade, Mercury incorrectly reported the date of at least 49 stock-option grants, almost always picking a date on which the stock price was lower than it was when the option was actually granted. Landan, Smith and Skaer all knew of the misdating and each personally profited from it, Mercury said.

Mercury said in August it would need to restate several years' worth of its financial filings. It hopes to file its restatement this month, but it warned its ability to do so is "in serious jeopardy". If the restatement isn't completed by 30 November, the company risks being delisted by Nasdaq.

Mercury has appointed president and COO Tony Zingale as CEO. David Murphy, previously its senior vice president of corporate development, will take over the CFO spot, and elected board member Giora Yaron will replace Landan as chairman.

Mercury is an IT governance and applications-testing software maker with ambitions to crack into the top tier of software vendors. Last year, it reported revenue of $685.5 million, up 35 percent from 2003.

Losing Landan, who helped build Mercury and steered it for most of the past decade, increases the probability of the company being sold off, according to IDC analyst Stephen Elliot. "It's sort of the headless horseman now," he said. "This could really change the direction of the company."